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Hypotheses·fiscal·uk_truss_mini_budget_currency_sovereign_mechanism

UK Truss mini-budget 2022 gilt crisis reflected market confidence and institutional-framework rupture rather than an MMT-predicted hard fiscal limit, because the BoE restored order by intervening as issuer.

PARTIALengine/runs/uk_truss_mini_budget_currency_sovereign_mechanism

partial — Both mechanism legs are directionally consistent but at least one fails the SUPPORTED threshold: FX leg holds (5.02% trough decline); yield leg partial (61bp spike, 28% retrace).

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

In plain terms, this asks whether mini budget announcement is actually linked to better or worse gilt yield 30y from 2022 to 2023.

plain answer

The evidence is suggestive but not decisive. Both mechanism legs are directionally consistent but at least one fails the SUPPORTED threshold: FX leg holds (5.02% trough decline); yield leg partial (61bp spike, 28% retrace).

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 2022 to 2023, using a event study design, with fixed effects for date.

what was measured
What changed
  • Mini budget announcement
  • Boe gilt intervention announcement
What we checked
  • Gilt yield 30y
  • Gilt yield 10y
  • Gbp usd spot
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/uk_truss_mini_budget_currency_sovereign_mechanism
1007550250202220232023GBR
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show gilt_yield_30y across 1 sampled countries over 2022–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for uk_truss_mini_budget_currency_sovereign_mechanism. Published chart will be generated from engine/runs/uk_truss_mini_budget_currency_sovereign_mechanism/chart_data.json.

Who has skin in the game — schools predicting on this

10 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Chicago School Monetarismwins if SUPPORTEDpartial/no-callDegrowth / Ecological Macroeconomicswins if MIXEDpartial/no-callDemocratic Socialism (Bernsteinian revisionism + modern)wins if MIXEDpartial/no-callEco-Socialism / Red-Greenwins if MIXEDpartial/no-callMarket Socialism (Lange-Lerner tradition)wins if MIXEDpartial/no-callMarxian Political Economywins if MIXEDpartial/no-callMarxism-Leninism (central-planning implementation)wins if MIXEDpartial/no-callModern Monetary Theorywins if MIXEDpartial/no-callNew Keynesian (mainstream synthesis)wins if MIXEDpartial/no-callPost-Keynesianwins if MIXEDpartial/no-call

Pre-registration

pre-registered
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z

UK Truss mini-budget 2022 gilt crisis reflected market confidence and institutional-framework rupture rather than an MMT-predicted hard fiscal limit, because the BoE restored order by intervening as issuer.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

PRIMARY (dispositive): the dispositive thresholds for this hypothesis are encoded directly in engine/runs/uk_truss_mini_budget_currency_sovereign_mechanism/replication.py and pinned in methodology_note. The auto-grader's verdict in diagnostics.json corresponds to those dispositive checks, not to the legacy boilerplate. See methodology_note for the exact pre-registered thresholds. Headline: REFUTED if FX leg < 1.5% OR yield leg < +20bp OR retrace < 25%.

formal test & threshold
test:      High-frequency event study (intra-day, ±2d) around 2022-09-23 mini-budget and 2022-09-28 BoE LDI intervention; outcomes 30y gilt yield, GBP/USD, gilt curve breakpoints. Refute if BoE intervention does not normalise gilt yields within 5 trading days OR if pre-intervention spike persists post-Truss-resignation absent BoE action.

Method

Template
event_study
Fixed effects
date
Clustering
date
Sample
1 countries · 2022 – 2023
Evidence type
associational

High-frequency event study around the September 2022 mini-budget announcement and BoE gilt-market intervention dates, with gilt yields, GBP, and gilt-yield/yield-curve breakpoints as outcomes. Tight intra-day window isolates announcement effects from confounders.

Data

VariableSourceTransform
gilt_yield_30y
outcome
boe:IUDMNZCtier 1
bp_level
gilt_yield_10y
outcome
boe:IUDMNZCtier 1
bp_level
gbp_usd_spot
outcome
fred:DEXUSUKtier 1
boe:XUDLUSStier 1
log_level
gbp_eur_spot
outcome
ecb:EXR.D.GBP.EURtier 1
boe:XUDLERStier 1
log_level
ldi_pension_fund_collateral_indicator
outcome
boe:financial_stability_reporttier 1
descriptive_event_indicator
mini_budget_announcement
treatment
constructed:indicator = 1 on 2022-09-23 (Kwarteng growth-plan announcement); 0 otherwisetier 5
event_dummy
boe_gilt_intervention_announcement
treatment
constructed:indicator = 1 on 2022-09-28 (BoE temporary gilt-purchase facility); 0 otherwisetier 5
event_dummy
truss_resignation
treatment
constructed:indicator = 1 on 2022-10-20; 0 otherwisetier 5
event_dummy
us_10y_yield
control
fred:DGS10tier 1
bp_level
bund_10y_yield
control
ecb:IRS.M.DEtier 1
fred:IRLTLT01DEM156Ntier 1
bp_level
vix
control
fred:VIXCLStier 1
level
boe_bank_rate
control
boe:IUDBEDRtier 1
level_pct

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Truss 2022 mini-budget — currency + sovereign-yield mechanism

Verdict: partial — Both mechanism legs are directionally consistent but at least one fails the SUPPORTED threshold: FX leg holds (5.02% trough decline); yield leg partial (61bp spike, 28% retrace).

Summary

  • Event date: 2022-09-23 (Kwarteng growth plan).
  • BoE intervention: 2022-09-28 (temporary gilt-purchase facility).

Primary leg 1 — FX repricing (GBP/USD)

  • Pre-anchor close (2022-09-22): 1.1269 USD/GBP.
  • Trough close in 23-28 Sep (2022-09-26): 1.0703 USD/GBP.
  • Log-decline at trough: +0.0515 (+5.02%). Threshold for SUPPORTED: 3.0%; partial floor: 1.5%.

Primary leg 2 — Yield channel (UK 10y minus US 10y, bp)

  • Pre-anchor excess (2022-09-22): -15bp.
  • Peak excess in 23-28 Sep (2022-09-27): +46bp.
  • Spike size: +61bp. Threshold for SUPPORTED: +60bp; partial floor: +20bp.
  • BoE retrace 5 trading days after intervention close: 28% of the spike. Threshold for SUPPORTED: 50%; partial floor: 25%.

Method

Daily close-of-day mechanism event-window test. The MMT-style institutional-rupture-not-hard-fiscal-limit reading requires two empirical patterns: (1) a sharp pre-intervention sovereign repricing in the affected currency and yield curve, and (2) evidence that BoE intervention substantively retraces the yield repricing (i.e., the issuer's bank can normalise the channel). The yield leg is computed as a UK-US 10y excess (boe:IUDMNZC minus fred:DGS10) to net out the global rate backdrop. Both legs use the 2022-09-22 close as the pre-event anchor; the yield-spike window ends at 2022-09-28 (BoE-LDI facility close); the retrace is measured 5 trading days after the BoE close. The FX leg uses the trough close in the same 23-28 Sep window. Spec also names 30y gilt (boe:IUDLG7N) and FRED UK long-term yield (fred:IRLTLT01GBM156N) — neither is on disk in the current vintage; documented as data-gap.

Informative

  • UK-US 10y excess on Truss resignation (2022-10-20): -32bp (-17bp vs pre-anchor).
  • GBP/EUR cross-check (boe:XUDLERS, GBP per 1 EUR): trough 1.1159 on 2022-09-28 (log-change vs anchor -0.0280; positive = GBP weakened vs EUR).
  • VIX change t..t+5d: +1.70 pts.
  • BoE Bank Rate change t..t+5d: +0.000pp.
  • SONIA change t..t+5d: +0.002pp.

Data

  • fred:DEXUSUK (USD per GBP, daily) — primary leg 1
  • boe:IUDMNZC (UK 10y gilt yield, daily) — primary leg 2
  • fred:DGS10 (US 10y treasury yield, daily) — primary leg 2 control
  • fred:DGS30, fred:VIXCLS, boe:IUDBEDR, boe:IUDSOIA, boe:XUDLERS — informative
  • boe:IUDLG7N (UK 30y gilt) — MISSING (data gap)
  • fred:IRLTLT01GBM156N (UK long-term yield) — MISSING (data gap)

Notes

Maps the MMT school's Truss-as-institutional-rupture-not-hard-limit claim to a high-frequency event study around 2022 gilt-crisis dates. Estimator and prior set; full pre-registration awaits steelman + human sign-off.

Authored framework. Read the transparency note.